When you have a brokerage account with marginable securities (meeting current regulatory requirements), they can be used as collateral to finance the purchase of additional securities.

Borrowing from a margin account is convenient and offers an attractive interest rate on a loan that may be used to finance investments. The interest charges that are created may sometimes be deducted from your short-term capital gains or interest and dividends income to help you save on taxes. Please consult your tax advisor for specifics.

There are some risks, however, such as the market value of the securities you pledged as collateral declining which may result in the requirement to pledge additional collateral. There also is the possibility of losing proxy voting rights for securities or receiving payments-in-lieu of dividends on margin securities if they are loaned out.

If the equity of the market value falls below the required minimum, it will fall into a margin call status. Scott & Stringfellow will then require the deposit of additional collateral or you will be required to liquidate some or all the assets in the account to restore the correct ratio of equity to debit balance. Scott & Stringfellow may liquidate your securities in any Scott & Stringfellow account without notice in order to meet a maintenance (margin) call. In addition, if you have a margin debit balance, Scott & Stringfellow has the right to lend shares of the securities held in margin accounts whereby you, as the margin customer, may lose the ability to vote the securities held in such margin accounts. Margin customers are at risk of receiving payments-in-lieu of dividends on shares that are lent past the ex-dividend date (the date when the seller/loaner of the stock would be entitled to the recently announced dividend payment). Scott & Stringfellow is required to report such payments as ordinary income, which may cause customers with taxable accounts to lose the benefit of preferential tax rates on dividends. Please consult with your professional tax advisor for specifics.

When borrowing funds from Scott & Stringfellow, you are responsible for the payment of interest on those funds as well as the repayment of the loan amount. The amount that you are required to deposit in your account is known as the margin. The extension of credit by a broker-dealer is regulated by the Federal Reserve Board ("FRB"). The FRB margin requirement is 50 percent for an initial purchase. For the initial purchase transaction in your margin account, the New York Stock Exchange ("NYSE") and Financial Industry Regulatory Authority ("FINRA") require that you establish a minimum equity. The minimum equity deposit is $2,000 or 100 percent of the original purchase price, whichever is less. If the deposit meets the $2,000 requirement of the NYSE and FINRA, you would also be required to meet the FRB requirement of at least 50 percent cash on deposit.

The NYSE and FINRA require that you maintain a minimum amount of equity in your margin account. Additionally, there may be Firm margin maintenance requirements as well. Should the equity drop below the minimum, you will receive a maintenance (margin) call for an amount great enough to bring your account equity back up to the required minimum amount. When a maintenance call is made, the call must be met promptly. It may be met by depositing a check or Fed wire, liquidating securities, or by depositing margin-eligible fully-paid-for securities. Scott & Stringfellow may liquidate your securities in any Scott & Stringfellow account without notice in order to meet a maintenance (margin) call.

We want you to know that margin accounts add risk and you may lose more than you invested. Please read your margin account agreement carefully before using margin.